The White House Softens Its Tough Trade Rhetoric

When Bush Administration officials were debating which countries to cite last month for unfair trading practices under the 1988 Omnibus Trade Act, their overwhelming goal was to satisfy Congress.

That they did, by singling out Japan, Brazil and India as top priorities for retaliation because those countries had not met U.S. demands that they lower their trade barriers.

But here in Paris, the Administration learned the hard way that what plays with Congress may not go down well overseas. Even as President Bush was winning rave reviews for his performance at the NATO summit meeting in Brussels, U.S. economic officials ran into a barrage of criticism at a ministerial meeting of the Paris-based Organization for Economic Cooperation and Development.

The 24-country organization formally rebuked the United States for threatening “unilateral” U.S. retaliation--instead of going through the established international machinery--to prosecute America’s trade disputes.

American officials, who like to portray themselves as champions of free trade, had to scramble just to assure U.S. allies that they were not abandoning the current round of global trade-liberalization talks that the United States has spearheaded since 1982.

The members of the Bush economic and trade team went home chastened, clearly more cautious in their rhetoric about alleged unfair trading practices abroad.

Administration officials did not offer to withdraw their threat of retaliation against Japan, Brazil and India. But they seem to have gained an appreciation of the impact of the U.S. example in moving the world--grudgingly at times, it may seem--toward more open trade.

Mosbacher Chastened

By the end of last week’s OECD session, U.S. Trade Representative Carla A. Hills was insisting that the Administration had never even suggested that the trade practices of the three countries it had cited were actually unfair. “The press has identified the practices we have named (as unfair), but I have not,” she declared.

Commerce Secretary Robert A. Mosbacher, who warned earlier this year that Europe’s intention to create a continent-wide marketplace by 1992 could create a “Fortress Europe,” also seemed chastened.

Only a few weeks ago, Mosbacher had demanded that the United States be given “a seat at the table” while the European Community hammered out product standards that would prevail in 1992--an audacious act, by European standards, that quickly earned him a reputation as a “cowboy.”

But last week, the Texas-rooted Commerce secretary was strumming a different tune. “I think, by and large, the fear of Fortress Europe is diminishing,” Mosbacher told a press conference. “The fear and the fight (are) evaporating.”

The Bush Administration is not the first new American government to experience a learning process during its first exposure to international meetings of this sort.

President Jimmy Carter’s Administration changed its views markedly. Its decision to decontrol oil prices stemmed mainly from the pressure it received from abroad.

And the Ronald Reagan Administration, which came into office openly flaunting an “America First” policy on economic issues, was eventually forced to think more globally. In its final three years, it accepted international agreements--for joint action to drive down the value of the dollar and launch global trade talks--that it would have rejected earlier.

But the learning process works both ways. As a result of the heated dialogue of the past week, policy makers of the 23 other OECD countries left here far less apprehensive about the direction of U.S. trade policy than they were a week earlier.

Although America’s allies retain some uneasiness about the new, more aggressive U.S. trade policy, they appeared satisfied that the United States was not about to abandon its commitment to free trade and capital flows among countries.

Signs of Accord

“I think it was very clear from (discussions with) the American delegation at this meeting that the U.S. is approaching this situation in a spirit of multilateralism,” Iceland’s trade minister, Jon Sigurdson, who served as chairman of this year’s OECD conference, said after the closing session.

The fact that the OECD’s communique was watered down from a more sternly worded preliminary version suggests that other delegates may have agreed. In the end, only a single paragraph of the communique took the United States to task for “unilateralism” in its approach to trade policy.

Perhaps as a result, negotiators here made progress on substantive issues. Japan, which had indignantly announced before the meeting that it would never negotiate on the U.S. complaints under the threat of possible retaliation, grudgingly agreed to “discuss” them--so long as it was in separate talks where the threat of retaliation under the 1988 trade law was not mentioned.

Even more important, Tokyo agreed to begin wide-ranging “two-way” talks with the United States on a series of broader economic issues that Washington says are impeding progress on the trade front.

The discussions, proposed by President Bush at the same time that the United States announced its trade cases two weeks ago, would include everything from possible reform of Japan’s notoriously discriminatory product distribution system to the seeming inability of Americans to save enough to finance the investment needed to expand and modernize the nation’s production capacity.

These broader talks, economists say, could do far more than any number of unfair-trading cases to correct the $55-billion trade imbalance between the United States and Japan.

Nevertheless, Bush Administration officials have given no signals that they intend to abandon their aggressive trade stance. Despite the pounding that they took from the OECD, they realize that it is more important to satisfy Congress than America’s trading partners.

But the past week’s experience in Paris may make some of the Administration’s more outspoken senior officials more aware of the impact of America’s domestic actions and less likely to flirt with sharp departures from previous trade policy--such as a shift toward more government-sanctioned cartels and “managed” trade.

“I do not expect any direct action by the U.S. government” to change its policies, Iceland’s Sigurdson said. “But I certainly expect the spirit of (the OECD communique) to influence how they will carry them out.”